DGAP-UK Regulatory Service: Commerzbank AG / Quarter Results
Commerzbank: Operating profit of EUR 469 m in the first quarter of
2013 - pre-tax profit includes all restructuring charges
07.05.2013 / 07:04
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- Pre-tax profit of minus EUR 24 m in the first quarter of 2013 due to
announced restructuring expenses of EUR 493 m; net profit of minus EUR
94 m
- Revenues increase by 4.7% compared to fourth quarter of 2012, operating
expenses 2.9% lower than in the previous quarter
- Core Bank has increased operating profit by 36% over the previous
quarter to EUR 556 m
- NCA portfolio reduced by a further EUR 7.3 bn in the first quarter of
2013
- Blessing: 'We were able to increase our operating profit in the first
quarter and have made considerable progress in the consistent reduction
of our non-strategic activities'
In the first quarter of 2013 Commerzbank attained an operating profit of
EUR 469 million (Q4 2012: minus EUR 40 million). The reasons for the
increase over the previous quarter were higher revenues, lower loan loss
provisions, as well as lower costs. In a year-on-year comparison, however,
the operating profit decreased mainly due to the deterioration in the
interest rate environment (Q1 2012: EUR 576 million). In the Core Bank,
which encompasses the strategically significant customer-centric business
of Commerzbank, the operating profit improved over the previous quarter to
EUR 556 million (Q4 2012: EUR 408 million; Q1 2012: EUR 866 million).
'We were able to increase our operating profit in the first quarter despite
a very challenging environment with extremely low interest rates, and have
made further considerable progress in the consistent reduction of our
non-strategic activities. Furthermore, we have begun to implement the
planned investments in the future of the Bank. The clear focus this year
lies on the implementation of the strategic agenda. The positive effects
from this should increasingly become visible from the coming year onwards.
Initial initiatives are already bearing fruit - in particular in the
Private Customers business,' said Martin Blessing, Chairman of the Board of
Managing Directors of Commerzbank.
Revenues increased with a simultaneous reduction in costs and lower loan
loss provisions
The Group's revenues before loan loss provisions in the first quarter of
2013 were EUR 2,460 million (Q4 2012: EUR 2,349 million). This increase
results from improved commission income and a rise in the trading result as
a consequence of greater client activity. On the other hand the ongoing
weak interest rate environment was one of the factors leading to lower
interest income. The loan loss provisions in the Group declined by 56.5% to
EUR 267 million in the first quarter of 2013 (Q4 2012: EUR 614 million).
Thanks to recently initiated efficiency measures it was possible to reduce
the operating expenses over the previous quarter by EUR 51 million to EUR
1,724 million (Q4 2012: EUR 1,775 million).
The pre-tax profit include the announced restructuring expenses of EUR 493
million and in the first quarter of 2013 amounted to minus EUR 24 million
(Q4 2012: minus EUR 225 million). In total Commerzbank posted a net profit
of minus EUR 94 million (Q4 2012: minus EUR 726 million).
Risk-weighted assets virtually unchanged, Core Tier 1 ratio at 11.5%
The risk-weighted assets (RWA) increased over the previous quarter by
nearly 1% to EUR 210 billion (Q4 2012: EUR 208 billion). In a year-on-year
comparison, in contrast, the RWA declined by 5.9%. The total assets in the
Group increased versus the fourth quarter of 2012 to EUR 647 billion (Q4
2012: EUR 636 billion). Compared to the same period of the previous year
this represents a decrease of 6.3%, however. The Core Tier 1 ratio declined
since end of December 2012 by 0.5 percentage points to 11.5% yet remains at
a comfortable level. The main reason for this was the first-time
application of new accounting regulations for pension commitments. Under
full application of Basel 3 the Common Equity Tier 1 ratio as of the end of
March would be 7.5%.
'The Common Equity Tier 1 ratio under full application of Basel 3 should be
increased significantly by around 1 percentage point as a result of the
planned capital increase. Thus we will attain our target of 9% for this
Common Equity Tier 1 ratio probably as early as the end of 2014,' said
Stephan Engels, Chief Financial Officer of Commerzbank.
Funding position remains comfortable
Commerzbank remains in a comfortable funding situation. In the first
quarter of 2013 - in addition to the new 'Small and Mid-sized Enterprises
(SME) Structured Covered Bond' with a volume of EUR 500 million, senior
unsecured bonds with a volume of EUR 700 million were successfully placed
on the market. Within the context of meeting the requirements of
Commerzbank's branch network and for the further diversification of the
funding base, the Bank has the flexibility to procure funding from the
capital markets as opportunities arise. The funds from the three-year
tenders of the European Central Bank (LTRO I and II) were already repaid in
full by Commerzbank in the first quarter.
Profitability increases in the Core Bank, all operational Core Bank
segments positive
The operating profit of the Core Bank increased in the first quarter of
2013 versus the previous quarter by 36.3% to EUR 556 million (Q4 2012: EUR
408 million), with improvements in the results of the Private Customers
segment and in Corporates & Markets making major contributions to this
increase. Moreover, the reduction of the default portfolio saw further
progress in the first quarter; the solid portfolio quality of the Core Bank
has thus seen a further improvement. The ratio of non-performing loans (NPL
ratio) decreased to 1.9%, following on from 2.1% in the previous quarter
and 2.8% in the same quarter of the previous year.
The Private Customers segment was able to more than double its operating
profit in the first quarter of 2013 over the previous quarter, to EUR 70
million (Q4 2012: EUR 25 million). The key factors for this were higher
revenues, and in particular in the securities business, thanks to greater
client activity in the currently positive capital market environment. The
loan loss provisions rose as expected. The operating expenses were
maintained at a stable level over the fourth quarter of 2012 thanks to
active cost management. The impact of the ongoing reorientation of the
Private Customers business also became tangible in the first quarter of
2013: Thus the new business in construction financing was increased to more
than EUR 1.8 billion, the volume in asset management rose by 10%.
Mittelstandsbank attained an operating profit of EUR 325 million (Q4 2012:
EUR 374 million). The revenues before loan loss provisions declined
especially due to positive valuation effects from restructured loans in the
fourth quarter of 2012 which did not reoccur in the first quarter of 2013,
the weak interest-rate environment, and a moderate demand for loans. As
expected the loan loss provisions increased in the first quarter of 2013 to
EUR 78 million. The operating expenses decreased over the fourth quarter of
2012 by 6.6%, to EUR 325 million. The operational return on equity at
Mittelstandsbank in the first quarter was more than 22%, the cost-income
ratio in the operational business was less than 45%.
The Central & Eastern Europe segment increased its operating profit over
the fourth quarter of 2012 to EUR 75 million (Q4 2012: EUR 42 million). The
decisive factors here were lower loan loss provisions of EUR 6 million due
to successful restructuring and lower operating expenses of EUR 104
million. The lower interest income as a result of the interest rate cuts by
the Polish Central Bank was compensated for by an increase in the trading
result.
Corporates & Markets was able to significantly increase its operating
profit to EUR 271 million (Q4 2012: minus EUR 69 million). Seasonal effects
and the increase in client activity, and in particular in trading in
interest-rate derivatives and equity derivatives, led to higher revenues in
the first quarter of 2013. The operating profit also includes a small
positive effect from the market valuation of Commerzbank's own liabilities
('Own Credit Spread' - OCS) in the amount of EUR 25 million, after a
negative OCS effect of minus EUR 118 million in the fourth quarter of 2012.
In the first quarter of 2013 the loan loss provisions also saw net
reversals of EUR 26 million. The operating expenses declined over the
previous quarter by 6.9% to EUR 338 million.
Further progress with portfolio reduction in the Non-Core Assets segment
The Non-Core Assets (NCA) segment was able to clearly reduce its loss over
the previous quarter to minus EUR 87 million (Q4 2012: minus EUR 448
million). The main reason for this was a decrease in the loan loss
provisions by 65.8% to EUR 175 million. Despite the ongoing portfolio
reduction it was possible to keep the revenues stable. In line with the
portfolio reduction the operating expenses were lowered by 19.4% to EUR 83
million. With regard to the portfolio reduction it was possible to achieve
excellent progress for the second quarter in a row: Especially the
Commercial Real Estate and Public Finance portfolios were reduced further
in the first quarter of 2013. In total the NCA portfolio has been lowered
by EUR 7.3 billion since the end of 2012 to approximately EUR 143 billion,
after approximately EUR 9 billion had already been reduced in the fourth
quarter of 2012. Since the first quarter of 2012 it has been possible to
reduce the portfolio in the field of Ship Finance by 10%, in the field of
Commercial Real Estate by 20%, and in Public Finance by 10%. At the same
time the portfolio quality was maintained.
Outlook
'Against the background of an economic and capital market environment that
remains challenging we continue to assume that the operating profit in 2013
as a whole will be shaped by ongoing pressure on revenues, slightly
increasing loan loss provisions and an investment-related increase in
costs. We will continue the value-preserving reduction in the NCA segment
provided the market environment remains positive. We continue to aspire to
maintain a Common Equity Tier 1 ratio - taking into account the
transitional regulations of Basel 3 - of significantly more than 9%
throughout the whole of 2013,' said Stephan Engels.
Excerpt from the consolidated profit and loss statement*
<pre>
In EUR m Q1 2013 Q1 2012 Q4 2012 2012
Net interest income 1,356 1,694 1,728 6,487
Provisions for loan losses -267 -212 -614 -1,660
Net commission income 847 864 764 3,249
Net trading income 317 164 -383 89
Net investment income -6 -176 250 81
Current income on companies 8 11 12 46
accounted for at equity
Other income -62 21 -22 -77
Income before loan loss 2,460 2,578 2,349 9,875
provisions
Operating expenses 1,724 1,790 1,775 7,029
Operating profit or loss 469 576 -40 1,186
Impairments of Goodwill - - - -
Restructuring expenses 493 34 - 43
Net gain or loss from sale of - - -185 -268
disposal groups
Pre-tax profit or loss -24 542 -225 875
Taxes 45 159 477 806
Consolidated profit or loss -94 355 -726 -34
attributable to Commerzbank
shareholders
Cost/income ratio in operating 70.1 69.4 75.6 71.2
business (%)
</pre>
* Note:
As of January 1, 2013 Commerzbank is applying the new accounting
regulations from the International Accounting Standards (IAS).
Consequently, among other things all interest income from trading is posted
as part of the net interest income. To date this income has been posted as
part of the trading result. In the course of the new definition the Bank
has also decided to reclassify income components of the debt capital
markets business with commission characteristics. In the future these will
no longer be stated in the trading result but in the net commission income.
As of January 1, 2013 the new accounting regulations of IAS 19 were applied
for the first time to the valuation of pension commitments. To ensure
comparability with the previous year the figures for 2012 have been
adjusted. The figures originally reported for the 2012 business year remain
unchanged.
*****
Under www.tvservicebox.de you will find broadcast-ready video material with
statements by Stephan Engels from approximately 7am onwards.
The videos can be viewed directly using mobile end devices..
Statements Stephan Engels:
http://cbvideo.commerzbank.de/2013/Q1/Engels_en/index.php
*****
Press contact:
Simon Steiner +49 69 136 46646
Nils Happich +49 69 136 44986
Karsten Swoboda +49 69 136 22339
*****
About Commerzbank
Commerzbank is a leading bank in Germany and Poland. It is also present
worldwide in all markets for its customers as a partner to the business
world. With the business areas Private Customers, Mittelstandsbank,
Corporates & Markets and Central & Eastern Europe, it offers its private
and corporate clients as well as institutional investors the banking and
capital market services they need. With some 1,200 branches Commerzbank has
one of the densest branch networks among German private banks. In total,
Commerzbank boasts nearly 15 million private customers, as well as 1
million business and corporate clients. In 2012, it generated revenues of
just under EUR 10 billion with approximately 56,000 employees on average.
*****
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COMMERZBANK Aktiengesellschaft.
This release contains forward-looking statements. Forward-looking
statements are statements that are not historical facts. In this release,
these statements concern the expected future business of Commerzbank,
efficiency gains and expected synergies, expected growth prospects and
other opportunities for an increase in value of Commerzbank as well as
expected future financial results, restructuring costs and other financial
developments and information. These forward-looking statements are based on
the management's current expectations, estimates and projections. They are
subject to a number of assumptions and involve known and unknown risks,
uncertainties and other factors that may cause actual results and
developments to differ materially from any future results and developments
expressed or implied by such forward-looking statements. Such factors
include the conditions in the financial markets in Germany, in Poland,
elsewhere in Europe and other regions from which Commerzbank derives a
substantial portion of its revenues and in which Commerzbank holds a
substantial portion of its assets, the development of asset prices and
market volatility, potential defaults of borrowers or trading
counterparties, the implementation of Commerzbank's strategic initiatives,
the reliability of Commerzbank's risk management policies, procedures and
methods, and other risks. Forward-looking statements therefore speak only
as of the date they are made. Commerzbank has no obligation to periodically
update or release any revisions to the forward-looking statements contained
in this release to reflect events or circumstances after the date of this
release.
Contact:
Commerzbank AG
Group Communications
Tel.: +49 69 136 - 22830
mediarelations@commerzbank.com
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Language: English
Company: Commerzbank AG
Kaiserplatz
60261 Frankfurt am Main
Germany
Phone: +49 (069) 136 20
Fax: -
E-mail: ir@commerzbank.com
Internet: www.commerzbank.de
ISIN: DE000CBK1001
WKN: CBK100
Indices: DAX, CDAX, HDAX, PRIMEALL
Listed: Regulierter Markt in Berlin, Düsseldorf, Frankfurt
(Prime Standard), Hamburg, Hannover, München,
Stuttgart; Terminbörse EUREX; London, SIX
Category Code: MSC
LSE Ticker: CZB
Sequence Number: 1443
Time of Receipt: May 07, 2013 07:00:30
End of News DGAP News-Service
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209917 07.05.2013
DGAP-UK-Regulatory: Commerzbank: Operating profit of EUR 469 m in the first quarter of 2013 - pre-tax profit includes all restructuring charges
| Source: EQS Group AG